Polish Construction Review – Issue No. 2 (107) Thursday, 4 February 2010

The right to build up a plot can be estab- lished for a charge or free-of-charge, with the charge being a single lump-sum payment or periodic payments. The Bill also provides for a special way Right to build up a plot as an for the right to build up a plot to be con- ferred, that is, by way of tabular possession alternative to the right of perpetual (pl: zasiedzenie tabularne), i.e. the Land and Mortgage Register can disclose a specific in- usufruct dividual as the person enacting the right to build up a plot though that individual is not Work is currently underway at the Ministry of Justice on Bill Amending the entitled to that right. In such a case, the right Polish Civil Law and a number of other statutes (“Bill”). The Bill provides for the to build up a plot can be conferred onto that establishment of a new limited property right – in addition to the rights of usu- person as long as the plot is owned for ten years, provided that at the submission of fruct, easement, pledge, cooperative ownership of a dwelling, and mortga- the application for its entry in the Land and ge – namely, the right to build up a plot. The aim of this article is to provide an Mortgage Register the person disclosed in overview of select elements of the proposed legislative solutions. the Register was not in bad faith. A big advantage of the right to build up a The Bill represents a response to postulates to but which is not being developed by the per- plot is the possibility of establishing sever- reform the right of perpetual usufruct, for- petual usufructuary. al such rights for a single plot of land, thus mulated by representatives of both doctrine The agreement establishing the right to making it possible to execute on one real and practice. Recognizing the needs of the build up a plot should define the type of property owned by a single person several real estate market as well as legislative prob- structure to be erected, the manner and investments by a number of investors, e.g. lems, the decision was made not to do away, scope of the intended use of the encumbered shopping centre, residential building, metro at least for now, with the right of perpetual plot, and the duration of the right to build station. On the other hand, the right to build usufruct but to create a new legal structure to up the plot. There are certain concerns about up a plot can be established as a joint prop- exist alongside it. Yet, in the future the right the requirement that the agreement define erty right, i.e. conferred across more than one to build up a plot might supersede the right the type of structure to be erected. It is diffi- plot, which would make it possible to execute of perpetual usufruct. cult, at this stage, to foresee how much detail thereon or thereunder a building or other The right to build up a plot is not a novelty will have to be provided, yet we should hope structures which extend beyond the bound- for either Polish legislation (it was in effect in that the information will not have to be over- aries of a single plot, e.g. sewage system or the period between the two World Wars and ly detailed as to avoid a situation in which an high voltage lines. also briefly after WWII after which it was su- overly explicitly defined type of building does The right to build up a plot is transferrable, perseded by the so-called temporary rights not comply with the provisions of the local and as such can be inherited. Moreover, the of property) nor European regulatory system master plan amended after the conclusion of person enacting the right to build up can es- under which it has been successfully imple- the agreement establishing the right to build tablish thereon limited property rights, such mented in many countries. up the plot. The parties to the agreement can as an easement, a lease or a mortgage. Thus, As the right of perpetual usufruct, the right state explicitly in the agreement, for example, the person can raise funds for the investment to build up a plot confers rights to use oth- that the existing or planned building or oth- by establishing a security on the right to build er’s real property, yet not in as wide a scope er structure will be the property of the own- up a plot in the form of a mortgage, as is pos- as the right of perpetual usufruct. Pursuant er of the plot as an integral part thereof, or sible in the case of the rights of ownership to the Bill, it confers the right to encumber a the obligations of the party exercising the and of perpetual usufruct. real property with the right to erect or to use right to build up the plot to erect a defined In principle, buildings and other structures buildings or other structures already situat- building structure by a specific deadline. erected on or under the encumbered plot or ed thereon or thereunder. Unlike in the case To be effective, the agreement establishing existing at the time of the establishment of of the right of perpetual usufruct, which can the right to build up a plot must be execut- the right to build up a plot are the property of be established on publicly owned land, the ed in the form of a notary deed. The right the person entitled to build up the plot. Thus, right to build up a plot can be established also to build up is established at its entry in the the Bill has introduced an exception to the on private land, which without a doubt will Land and Mortgage Register maintained for principle of accession (superficies solo cedit), make it easier to execute some investments. It that right. At the same time, the right should like the one applicable to the right of per- is also worthy to add that the right to build up also be disclosed in the Land and Mortgage petual usufruct. An important difference in a plot can also be established on land previ- Register maintained for the plot. The right to the proposed regulations, relative to the ex- ously ceded under the right of perpetual usu- build up a plot can be established for between isting provisions, is that the person entitled fruct. In such a case, it is established by the 30 and 100 years; it can be extended through to build up the plot can use plant and equip- owner of the real property but only upon the a contractual extension executed to the origi- ment located on and under the plot surface. consent of the holder of the right of perpetu- nal agreement. Yet, unlike in the case of the One should also note that the Bill permits the al usufruct. As a consequence, it will be pos- right of perpetual usufruct, the Bill does not establishment of a separate title of ownership sible to build up a fragment of a plot already provide for the right to build up to entitle to to a dwelling in a building erected in exercise ceded under the right of perpetual usufruct, claims to extend the right to build up a plot. of the right to build up a plot. Thanks to this

PMR 15 Thursday, 4 February 2010 Polish Construction Review – Issue No. 2 (107) and the possibility of establishing the right to conditions relating to the enactment of the real estate, such as perpetual usufruct, sev- build up a plot ceded into perpetual usufruct, pre-emptive right, defined in the agreement eral rights to build up, and right of owner- it will be possible to establish several various establishing the right to build up a plot. The ship to a dwelling in buildings erected on the real estate rights on one piece of real property latter is conferred on the owner if the person land. The passing into law such options will – perpetual usufruct, right to build up a plot entitled to build up the property uses the plot help to increase interest among real estate in- and separate title of ownership to a dwelling. in a manner clearly incompliant with its pur- vestors in land on which investment have to According to the Bill, if the real property pose, in particular, if in breach of the agree- date been difficult; it will also make the -in encumbered with the right to build up is par- ment he does not erect a building or erects vestment process itself easier. titioned into several plots, the right to build contrary to the agreement’s provisions. up would continue to apply jointly on the Currently, the Bill is the subject of inter- separate plots created through the partition- ministry consultations at the Ministry of ing. Yet, if the right’s performance was lim- Justice. It seems to be a well thought out and ited to one or several plots, the owners of the comprehensive solution, which could be ac- remaining plots could ask to be released of cepted and approved. The proposed right Anna Kowalczyk-Pogorzelska the right to build up their plots. to build up a plot represents an instrument Łukasz Sęk The Bill also provides for contractual and thanks to which it will be possible to lever- Kancelaria Adwokatów i Radców Prawnych statutory pre-emptive rights of purchase. age real estate in broader than to date scope, Miller, Canfield, W. Babicki, A. Chełchowski The former is conferred on the owner of the as it will be possible to establish concurrent- i Wspólnicy Sp.k. property upon the fulfillment of terms and ly several various rights on a single piece of www.millercanfield.pl

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